Parity

Parity is a concept in agricultural economics that was of great political importance 1920s-1950s. Statistically it is the ratio of prices received by farmers for their crops and animals divided by the prices they pay for inputs, such as labor, land, fertilizer, machinery and seed. The base is 1910-1914, which were the "golden years" of prosperity in agriculture.

Framers believed that when the parity fell below 100 they were being victimized by the cities. Some aggressive farm groups, especially the American Farm Bureau Federation (the Farm Bureau) wanted parity ratios as high as possible.

In the 1920s farmers demanded the McNary-Haugen Bill, a panacea that would raise parity by having th government buy up surpluses at high prices and dumping them at low prices abroad. President Calvin Coolidge vetoed it. When parity fell very low in the early opart of the Great Depression, American farmers were devastated. In the 1930s the New Deal's AAA program sought to reach parity by reducing the volume of output. The AAA split the conservatives—those in rural America applauded and those in urban America opposed it. By 1938 a bipartisan compromise had been reached that continued into the 1950s.

The term "Purchasing Power Parity" is a statistical method used to make comparable measurements of the economies of different countries.